Regulator identifies £2bn savings for Britain’s railway from 2014 to 2019

The Office of Rail Regulation (ORR) has announced today that over £2 billion savings have been identified in plans which will enable Britain’s railways to achieve continued growth and increase rail capacity over the next five years.

New tougher regulatory targets will also see levels of train punctuality increase with at least nine out of ten trains running on time on every route, higher standards of network infrastructure management and improved safety for passengers and railway workers.

ORR has undertaken an extensive analysis of Network Rail’s Strategic Plan for the railways between 2014 and 2019, published in January this year. The plan sets out proposals for funding and improving the rail network as required by the Westminster and Scottish governments. It builds on the growth and success of Britain’s railways over the past decade, which has seen safety, punctuality and services improve – and prompted record rises in the number of passengers and the amount of freight carried.

ORR’s assessment shows that over the next five years the day-to-day cost of running the rail network (between 2014-19) should be £21.4 billion – nearly £2bn less than proposed by Network Rail. Savings will be achieved through the implementation of new technologies, better management of the railways and more efficient ways of working. These savings will not come at the expense of safety. The regulator has largely protected Network Rail’s maintenance expenditure so that the delivery of a high-performing railway is not compromised. There is also additional funding to improve the condition of civil structures (bridges, tunnels) as well as to upgrade and close level crossings.

With rail passenger numbers expected to rise by a further 14% by 2019, ORR has approved a £12bn programme of enhancement projects to boost capacity on Britain’s railways. However, nearly £7bn of these projects are in very early stages of planning. To safeguard taxpayer interests, before releasing funds for these schemes, ORR is requiring Network Rail to provide well-developed plans to ensure they represent real value for money. The regulator also proposes that Network Rail seeks input from train operators, stakeholders, and passengers to demonstrate these plans address the needs of rail users.

ORR Chief Executive Richard Price said:

“Britain’s railway is a success story and it has made significant progress over the last decade. In order to sustain this progress and retain support and confidence, the industry must continue to improve its efficiency to reduce its dependence on public subsidy.

“We have set out what Network Rail and its industry partners will need to deliver between now and 2019 for passengers, freight customers, train operators, and taxpayers. Passengers will benefit from increases in capacity through a major programme of enhancements and improvements in punctuality, tackling in particular the worst-performing lines. Not only that, we are proposing that rail users should have more say in what enhancements to the railways are delivered and how.

“This determination is stretching but achievable and it gives Network Rail incentives to build on past successes, and do even better than the challenges we have set.”

By the end of 2019, ORR will require Network Rail to achieve:

• Improved performance for passengers – An average of 92.5% of trains on all routes up and down the country must arrive on time, with the difference between the best and the worst performing routes narrowing. At least nine out of ten trains must run on time on all routes.
• Delivery of projects to increase capacity and levels of service on the network – Many of Network Rail’s proposed enhancements to the rail network are in very early stages of planning. ORR has allocated funding to see these projects develop as fast as possible. The regulator is proposing that rail users and train operators are given a bigger role to shape the specification and delivery of Network Rail’s projects. This will help put passengers at the heart of decisions on how the railway is improved.
• Better management of the network infrastructure (assets) – Network Rail will have better and more up-to-date data on the condition of its tracks, bridges and other assets so that problems can be identified and fixed before they occur, significantly reducing delays caused by asset failures. The regulator will specify how progress is measured, and ensure the company is working to stretching new regulatory targets. Network Rail will also improve the resilience of the network to climate change.
• Improved safety for rail passengers and workers – ORR has approved £67 million funding to upgrade and close level crossings in England and Wales. Network Rail must reduce the risk of train accidents and work towards eliminating fatalities and major injuries.
• Greater efficiencies and value for money – ORR’s analysis shows that Network Rail can deliver what the governments want by spending £2bn less than proposed. Through more effective incentives, ORR is encouraging train operators, Network Rail and the supply chain to work together to create further opportunities to save money.